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This diagram charts the flow of behavioral health care funding, from state and local government sources all the way to patients. HSD’s recent decision to cut off funding to local providers has left some patients wondering where their care will come from.

Stuck in the Middle

In the flap over behavioral health funding, patients have the most to lose

Three years ago, Victoria Blea found the body of her 15-year-old daughter dumped in a neighborhood street. She had died the night before of a prescription drug overdose after attending a party.

Since then, Blea has gone through plenty of trauma, suffering from anxiety and posttraumatic stress disorder. But she’s found silver linings along the way, including personalized care through a Medicaid community service worker.

“She’s there for me emotionally and physically,” Blea says. “Whenever I need her, whenever I have appointments, if I’m having a family crisis.”

But Blea is worried that her services may soon change and, at worst, disappear entirely. That’s because the state recently moved to cut off Medicaid funding for Hogares, Inc.—the Albuquerque-based behavioral health provider that supplies Blea with care—after an audit found an alleged $36 million worth of overbillings by Hogares and 14 other behavioral health providers across the state between 2009 and 2012.

Hogares CEO Nancy Jo Archer warns that the state Human Services Department’s decision means her organization’s funding will dry up within a month. What’s more, Hogares will still be contractually obligated to deliver services to people like Blea—even after its funding evaporates.

“If you can’t pay your staff, your staff [isn’t] going to work for free for months on end,” Archer says.

The implications for the state’s behavioral health population—mostly emotionally disturbed children and adults in need of supervision—are serious.

She told them about the audit, explaining that the findings had been turned over to state Attorney General Gary King for investigation. Until King’s office could resolve the matter, Squier continued, HSD had no choice but to cut off all state and federal funding for the 15 providers, who in total serve 30,000 patients like Blea, or 90 percent of the state’s behavioral health population.

The meeting sent the providers into crisis and confusion.

“It was announced publicly that we were all fraudulent and criminal,” says Mark Johnson, CEO of Santa Fe-based provider Easter Seals El Mirador. Despite that very public allegation, HSD refused to show the providers the full audit.

“It’s sort of oblique,” Archer says. “We have not had a chance to refute some of the findings or agree with some of the findings.”

Instead, HSD made public only the executive summary of the audit, which doesn’t detail where the alleged fraud actually occurred. To the providers, cutting off their funding without telling them the whole story constitutes a lack of due process.

“Usually, at the end of an audit, the auditors will sit down with you,” says former state Sen. Dede Feldman, D-Bernalillo, who led the Legislative Health and Human Services Committee for 12 years. “If things are really bad, you’ll get a corrective action plan. None of that happened. None of these providers had been told. That’s very unusual in an auditing process.”

But HSD spokesman Matt Kennicott says the decision to keep the audit under wraps came from King’s office. “Once they take the complete audit into their custody, we can’t release the audit,” Kennicott says, but he adds that HSD will “probably be able to release examples [from the audit] soon.”

Public Consulting Group, the Boston-based firm that conducted the audit, has run into trouble in the past. A 2012 PCG report that identified $38.5 million in Medicaid overpayments in North Carolina, for instance, was adjusted to a mere $3.7 million after that state’s auditor looked into it. Here in New Mexico, lawmakers asked State Auditor Hector Balderas to investigate.

In the meantime, HSD has contracted with five Arizona behavioral providers to oversee current billing. Kennicott says HSD is working with each provider on a case-by-case basis. If one runs out of money and the cases of potential fraud are found to be especially egregious, Kennicott says one of the Arizona providers could step in and replace it.

But, he stresses, the changes would have no impact on services. In other words, people like Blea don’t have to worry about losing their personal providers. Kennicott says the potential overspending problems would be the fault of management, not staff. In the case that an Arizona provider would have to step in and take over, all of the clinic’s previous staffers would have a chance to continue working for the new provider, he says.

But the changes have already had an impact on patients in Taos, where nearly three dozen employees who were caring for 65 patients were put on furloughs last week. Another provider, Las Cruces-based Southwest Counseling Center, warned that it may have to shut down its entire operation this week.

Blea, fighting tears, emphasizes how important Hogares has been in helping her cope with day-to-day life.“If it wasn’t for them, I don’t know that I could’ve gotten through this,” she says.

She adds that any change in her care could disrupt her recovery process.